Let's give the healthcare industry some credit here: these guys know how to make a buck. A year after all the doomsday rhetoric about healthcare reform, a look at the stock tables/reserve levels of the major US insurers shows they're doing very well, thanks. Stock analysts are upgrading their 2011 forecasts for the sector, despite the dreaded medical loss ratio (MLR) limits that became effective January 1.

Understandably, the insurance industry opposed the idea that at least 80 percent of healthcare premiums should be spent providing healthcare or promoting wellness some health insurance products, after all, have MLRs of 60 percent or less. But without that assurance, the health reform bill would have been mandating the purchase of what Southerners call a pig in a poke.

And so, the industry adjusts. The fears that some insurers would aggressively under-price have turned out to be largely unfounded. Brokers commissions have been adjusted in ways that seem rational. All sorts of things are construed as expense toward wellness promotion and coordination. And the MLR targets (I once heard someone joke that MLR stood for margins look ridiculous) are being called manageable by the CEOs of the major firms. In the end, those products that for actuarial reasons need to be priced with a margin greater than 80 percent will end up giving out refunds, and insurers will have to take a hard look at their SG&A costs which is not entirely a bad thing.

Nevertheless, insurance and brokers groups are pushing a bill in Congress to exempt broker commissions from the MLR calculus entirely, effectively setting the MLR threshold closer to .75 a much easier standard to meet and removing health plans incentive to cut back on broker commissions. At the same time, five states are petitioning for a waiver of the MLR requirement, arguing that adhering to the limits would disrupt their insurance markets.

Sure, change is disruptive. But the sky isn't falling.

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